(This story has been updated Monday from a previous version)
In a press release dated Thursday, August 3 from Salem Memorial Hospital, chairman of the board of directors Ray Bruno announced the appointment of Jason Edwards as interim chief executive officer at SMH, effective immediately.
“Salem Memorial Hospital Board of Directors would like to announce a change in administration,” said Bruno in the release. “Jason is a Salem native and has served the hospital and community in various roles for 20 years. Under Jason’s leadership, SMH will continue to move forward and provide the highest quality patient-centered healthcare with compassion and professional excellence.”
No other information was included in the release.
“In a phone call with chairman Bruno Wednesday afternoon, I was told that Jason Edwards would be named interim CEO,” SMH attorney Mark Weaver told The Salem News when contacted Thursday evening. “I don’t know when or how this decision was made.”
In a subsequent email sent from SMH 12:30 p.m. Friday, the board announced that during a closed session Tuesday a motion was made by Mike Swyers and seconded by Wanda Tatom to "speak to Edwards regarding his interest in being interim CEO and if interested to appoint immediately." Swyers, Tatom, Judy Thompson and Bruno voted yes. Board members A.J. Seay and Willie Strader resigned from the board Tuesday.
Also Thursday, Rural Health Group, which has been managing the hospital since February 2022, claimed the move by SMH is in violation of the contract signed in April between the two and gave SMH until the close of business Monday to sign an amendment handing pay and supervision of the CEO over to SMH and releasing RHG from liability or “RHG will terminate the agreement immediately by written notice to the hospital.”
Weaver on Monday said he had been in contact with RHG and that they had agreed to extend the deadline to allow the SMH board more time to consider the amendment. No timetable was agreed to.
Edwards replaces Wayne Reid, who was hired by RHG to serve as CEO as it was brought in to help SMH recover from financial issues that left the hospital close to bankruptcy. A 2021 audit showed SMH with a $6.4 million loss from operations, and it dipped to three days cash on hand.
Just Tuesday, RHG during a regular meeting of the SMH board of directors announced it was ending the contract to run the hospital with a 30-day out. Then Thursday morning Bruno announced the board replaced Reid with Edwards. No vote of the SMH board was given in that release.
In the RHG letter to Bruno, signed by Dennis Davis, manager of RHG, Davis wrote that RHG has the right to terminate the contract “immediately” (Paragraph 9 of the agreement), but was willing to stay on for 30 days to help with the transition “under the assumption that the hospital would continue to honor the terms and provisions of the agreement.”
Davis went on to say in the letter to Bruno that Reid was “barred from entering the hospital” Thursday and was replaced by Edwards, but that the contract calls for RHG to be able to “employ a qualified person to act as the chief operating officer,” according to Paragraph 8 of the agreement.
The amendment sent by RHG Thursday calls for SMH to now employ a CEO during the 30-day transition, and that CEO will be paid by and be under the direct supervision of the hospital “through its board.” The amendment also requires SMH to agree that RHG nor any of its employees or agents hold any liability.
Davis describes SMH’s hiring of Edwards as a “breach of the agreement.”
Earlier Thursday, Rural Hospital Group sent a press release to The Salem News detailing their decision to announce the 30-day out, effective Sept. 1, during Tuesday's board meeting.
In the press release RHG stated it was hired by the SMH board in February 2022, and “encountered a critical situation where the hospital had a mere three days' worth of cash reserves and faced imminent closure. Most notably, the laboratory operations were shut down, and the hospital was operating without a CEO. Through dedicated efforts and strategic management, RHG has played an instrumental role in turning the hospital's fate around.”
RHG claims the work it and the SMH staff have done has resulted in the hospital now having 30 days cash on hand and bounced back from the $6.4 million loss from operations to $1 million in fiscal year 2023.
RHG's release says Reid “played a pivotal role in minimizing operating losses.”
As far as the timing, RHG in its release states it “recognizes that the recent changes in the board may signal an appropriate time for transition. With the considerable improvements made under RHG's stewardship, it is fitting that the hospital stands on its own merits to embrace the future.
“As RHG's management tenure comes to an end, we wish SMH continued success and prosperity. We remain committed to supporting a seamless transition and are confident that the hospital is well-prepared to navigate its path forward independently.”
CEO Edwards could not be immediately reached for comment.
